Fed Final Interim Rule Implements Appraisal Independence Provisions of TILA

The Federal Reserve Board of Governors published an interim final rule amending the Truth in Lending Act (TILA) and strictly prohibits coercion on real estate appraisals.

Regulation Z or TILA was enacted on July 21 as part of the Dodd-Frank bill to implement the appraisal independence provisions added to the TILA.

“Unlike HVCC which focused primarily on a creditor’s improper influence on an appraiser, these provisions also impose liability on persons other than the creditor and expressly prohibit an appraiser from misrepresenting the value of a property,” according to an alert from Weiner Brodsky Sidman Kider.


The Fed’s interim final rule provides that an appraiser or a person who prepares a valuation or who performs valuation management services may not have an interest, financial or otherwise, in the property or the transaction.  The rule also clarifies that an employment relationship or affiliation does not, by itself, violate the prohibition.

The Interim Rule replaces the Home Valuation Code of Conduct, which Dodd-Frank set for expiration on the date the Interim Rule issued.  The Board is soliciting comments on the Interim Rule generally and on a variety of specific issues.

The Interim Rule is effective December 27, 2010 and compliance is mandatory April 1, 2011.


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  • What a truly novel idea, appraisers actually responsible for being independent when giving a conclusion on value (LOL).

    “The rule also clarifies that an employment relationship or affiliation does not, by itself, violate the prohibition.” It is absolutely ridiculous if this clarification means that an appraiser can render an independent value on property or, more importantly, a property related transaction (such as a mortgage) in which the employer of the appraiser has any financial interest. The very definition of employer includes the concept of overseeing the work, not just the work product, of employees. Wasn’t this tried before with disastrous results?

  • there’s a hidden agenda in here- why then can banks still have ownership in the AMCs and REQUIRE their systems to order their borrower’s appraisals from the same AMC?

  • In my opinion, the HVCC regs are a big travesty to consumers. If appraisers are doing their job correctly, following licensing regs, there should be no issue. Following HVCC regs is like playing telephone as a kid; the ability to communicate, attain and receive accurate information is severly hindered. It adds costs, time, inhibits ability to properly service clients. Everyday it brings up issues in the reverse mortgage process, experience, workplace…….. frustrating.

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